<PAGE>

                                                                   EXHIBIT 10.36

                              EMPLOYMENT AGREEMENT

      This Employment Agreement (this "AGREEMENT") is made and entered into as
of June 1, 2004 (the "Effective Date"), by and between U.S. Health Services
Corporation, a Delaware corporation, (the "COMPANY"), Standard Management
Corporation, an Indiana corporation, (the "GUARANTOR"), and Martial R. Knieser,
M.D., an individual, (the "EXECUTIVE").

                                    RECITALS

      WHEREAS, the Company desires to hire Executive and Executive desires to
become employed by the Company; and

      WHEREAS, the Company and Executive have determined that it is in their
respective best interest to enter into this Agreement on the terms and
conditions as set forth herein.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and promises contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

      1. EMPLOYMENT. The Company hereby employs Executive, and Executive hereby
accepts employment by the Company, upon the terms and conditions set forth in
this Agreement.

      2. DUTIES. Executive shall serve as President, and such other positions as
may be mutually agreed upon by Executive and the Board of Directors of the
Company (the "Board"). Executive shall perform all reasonable duties assigned by
the Chairman and the Board and agrees to be subject to the general supervision,
orders, advice and direction of the Chairman and the Board.

      3. EXTENT OF SERVICES. During the term of Executive's employment
hereunder, Executive shall devote his full working time and efforts to the
performance of his duties and the furtherance of the interests of the Company
and shall not be otherwise employed. Notwithstanding the above, Executive may
serve as a director or trustee of other organizations, may practice medicine, or
engage in charitable, civic, and/or governmental activities provided that such
service and activities do not prevent Executive from performing the duties
required of Executive under this Agreement and further provided that Executive
obtains written consent for all such activities from the Company, which consent
will not be unreasonably withheld. Executive may engage in personal activities,
including, without limitation, personal investments, provided that such
activities do not interfere with Executive's performance of duties hereunder
and/or the provisions of Executive's written agreements with the Company.

      4. TERM. Subject to the provisions for termination in Section 8 below, the
initial term of employment of Executive under this Agreement shall be two (2)
years from and after the Effective Date (the "INITIAL TERM"). This Agreement
shall automatically renew annually for successive one (1) year periods (the
"RENEWAL TERM," and together with the Initial Term, the "EMPLOYMENT TERM"),
unless the Company or Executive elects not to renew this Agreement by serving
written notice of such intention not to renew on the other party at least ninety
(90) days

<PAGE>

prior to the succeeding Effective Date. If such an election is made, this
Agreement shall be in full force and effect for the remaining portion of the
then-current one (1) year period, subject to the provisions for termination in
Section 8 of this Agreement.

      5. COMPENSATION AND BENEFITS.

            5.1 BASE SALARY. In consideration of the services rendered to the
      Company hereunder by Executive and Executive's covenants hereunder, the
      Company shall, during the Employment Term, pay Executive a salary at the
      annual rate of Three Hundred Fifty Thousand Dollars ($350,000) (the "BASE
      SALARY"), less statutory deductions and withholdings, payable in
      accordance with the Company's regular payroll practices. Executive may
      receive annual salary increases based upon his performance in his
      executive and management capacity. The amount of such salary increases
      shall be determined by the Board or the Compensation Committee of the
      Board (the "COMPENSATION COMMITTEE").

            5.2 BONUS. In addition to base salary, within ninety (90) days after
      the end of each calendar year of the Company, Executive shall be entitled
      to receive a bonus equal to one percent (1%) of the Company's earnings, on
      a consolidated basis, before interest and taxes for such calendar year of
      the Company; provided, however, that no bonus shall be paid unless the
      Company earns a profit for the calendar year, and provided further that
      Executive must be actively employed by the Company on December 31 of the
      calendar year for which the bonus is to be paid. The bonus shall be
      calculated from the books and records of the Company and its affiliates,
      which shall be kept in accordance with generally accepted accounting
      principles applied by the Company in the preparation of its financial
      statements. In addition to the bonus described above, Executive may
      receive additional bonuses based upon his performance in his executive and
      management capacity. Whether to award such bonus increases and the amounts
      thereof shall be determined solely by the Board or the Compensation
      Committee.

            5.3 BENEFITS PACKAGE. During the Employment Term, Executive shall be
      entitled to participate in such employee benefit plans and insurance
      programs offered by the Company, from time to time for its executive,
      management or supervisory personnel generally, at such time as Executive
      shall have fulfilled the eligibility requirements for participation
      therein.

            5.4 VACATION. Executive shall be entitled to four (4) weeks' paid
      vacation each year of the Employment Term.

            5.5 EXPENSES. The Company shall, upon receipt from Executive of
      supporting receipts to the extent required by applicable income tax
      regulations and the Company's reimbursement policies, reimburse Executive
      for all out-of-pocket business expenses reasonably incurred by Executive
      in connection with his employment hereunder.

            5.6 LIFE INSURANCE. During the Employment Term, the Company shall at
      its expense maintain a term life insurance policy or policies on the life
      of Executive in the

                                       2
<PAGE>

      face amount of Five Hundred Thousand Dollars ($500,000). Four Hundred
      Thousand Dollars ($400,000) of the policy or policies is payable to the
      Company and One Hundred Thousand Dollars ($100,000) of the policy or
      policies is payable to such beneficiaries as Executive may designate.
      Following termination or expiration of this Agreement for any reason, for
      a period of sixty (60) days following the later of (i) termination or
      expiration of this Agreement and (ii) the date upon which the Company is
      no longer required to maintain such insurance for the benefit of
      Executive, Executive shall have the option to purchase from the Company
      the policy of insurance (other than group insurance) on the life of
      Executive. The purchase price of such policy shall be equal to the
      applicable portion of any prepaid premium thereon.

      6. STOCK OPTION. Subject to approval by the Board, Executive shall receive
an option to purchase a total of 100,000 shares (the "OPTION SHARES") of the
Guarantor's common stock (the "OPTION"). The Option shall vest over two (2)
years in accordance with the following vesting schedule, and at the closing
market price on the Effective Date: 33% on the Effective Date, 33% after
Executive's completion of one (1) year of service and the remaining 33% upon
Executive's completion of two (2) years of service.

            6.1 In the event of Executive's Involuntary Termination (as defined
      below) following a Change in Control (as defined below), the Option shall
      automatically accelerate so that the total number of vested Option Shares
      for which the Option shall be exercisable after taking such acceleration
      into account, shall be equal to the number of Option Shares in which
      Executive would have vested under the normal vesting/exercise schedule in
      effect for the Option had Executive completed service with the Company
      through the Severance Period (as defined below).

                        (i) An INVOLUNTARY TERMINATION shall mean the
            termination of Executive's employment by reason of:

                        1. Executive is terminated by the Company for reasons
            other than for Cause; or

                        2. Executive's voluntary resignation following (a) a
            change in Executive's position with the Company (or Parent or
            Subsidiary employing Executive) that materially reduces Executive's
            level of responsibility, or (b) a reduction in Executive's level of
            compensation (including base salary, bonus and fringe benefits),
            provided and only if such change or reduction is effected by the
            Company without Executive's consent, and

                        (ii) A CHANGE IN CONTROL shall be deemed to occur in the
            event of a change in ownership or control of the Guarantor effected
            through any of the following transactions:

                        1. the acquisition, directly or indirectly, by any
            person or related group of persons (other than the Guarantor or a
            person that directly or indirectly controls, or is controlled by, or
            is under common control with, the Guarantor) of beneficial ownership
            (within the meaning of Rule 13d-3 of the

                                       3
<PAGE>

            Securities Exchange Act of 1934, as amended) of securities
            possessing more than fifteen percent (15%) of the total combined
            voting power of the Guarantor's outstanding securities pursuant to a
            tender or exchange offer made directly to the Guarantor's
            stockholders; or

                        2. the sale, transfer or other disposition of all or
            substantially all of the Guarantor's assets, excluding the sale,
            transfer or other disposition of all or any part of the assets or
            stock of Standard Life Insurance Company of Indiana; the sale,
            transfer or other disposition of all or any part of the assets or
            stock of Standard Life Insurance Company of Indiana shall not
            constitute a Change in Control, and Executive will not be entitled
            to or awarded the enhanced vesting of stock options, enhanced
            severance benefits, or any other pay or benefits as a result of the
            sale, transfer or other disposition of any or all of the assets or
            stock of Standard Life Insurance Company of Indiana; or

                        3. a change in the composition of the Board of Directors
            of the Guarantor over a period of thirty-six (36) consecutive months
            or less such that a majority of the Board members ceases, by reason
            of one or more contested elections for Board membership, to be
            comprised of individuals who either (i) have been Board members
            continuously since the beginning of such period or (ii) have been
            elected or nominated for election as Board members during such
            period by at least a majority of the Board members described in
            clause (i) who were still in office at the time such election or
            nomination was approved by the Board; or

                        4. the consummation of a merger or consolidation of the
            Guarantor with or into another entity or any other corporate
            reorganization, if more than fifteen percent (15%) of the combined
            voting power of the continuing or surviving entity's securities
            outstanding immediately after such merger, consolidation or other
            reorganization is owned by persons who were not stockholders of the
            Guarantor immediately prior to such merger, consolidation or other
            reorganization.

                              A transaction shall not constitute a Change in
                  Control if its sole purpose is to change the state of the
                  Guarantor's incorporation or to create a holding company that
                  will be owned in substantially the same proportions by the
                  persons who held the Guarantor's securities immediately before
                  such transaction.

            6.2 The Option is to remain exercisable for three (3) months
      following the Involuntary Termination of Executive's employment.

      7. TERMINATION. Executive's employment and this Agreement (except as
otherwise provided hereunder) shall terminate upon the occurrence of any of the
following, at the time set forth therefor (the "TERMINATION DATE"):

            7.1 DEATH OR DISABILITY. Immediately upon the death of Executive or
      a determination by the Company that Executive has ceased to be able to
      perform the

                                       4
<PAGE>

      essential functions of his duties, with or without reasonable
      accommodation, for a period of not less than ninety (90) days, due to a
      mental or physical illness or incapacity ("DISABILITY") (termination
      pursuant to this Section 7.1 being referred to herein as termination for
      "DEATH OR DISABILITY"); or

            7.2 VOLUNTARY TERMINATION. Ninety (90) days following Executive's
      written notice to the Company of termination of employment; provided,
      however, that the Company may waive all or a portion of the ninety (90)
      days' notice and accelerate the effective date of such termination (and
      the Termination Date) (termination pursuant to this Section 7.2 being
      referred to herein as "VOLUNTARY" termination); or

            7.3 TERMINATION FOR CAUSE. Immediately following notice of
      termination for "Cause" (as defined below), specifying such Cause, given
      by the Company (termination pursuant to this Section 7.3 being referred to
      herein as termination for "CAUSE"). As used herein, "Cause" means (i)
      termination based on Executive's conviction or plea of "guilty" or "no
      contest" to any crime constituting a felony in the jurisdiction in which
      committed, any crime involving moral turpitude (whether or not a felony),
      or any other violation of criminal law involving dishonesty or willful
      misconduct that materially injures the Company (whether or not a felony);
      (ii) Executive's substance abuse that in any manner interferes with the
      performance of his duties; (iii) Executive's failure or refusal to perform
      his duties at all or in an acceptable manner, or to follow the lawful and
      proper directives of the Chairman, the Board or Executive's supervisor(s)
      that is not corrected within thirty (30) days after written notice from
      the Company to the Executive identifying such failure or refusal; (iv)
      Executive's breach of this Agreement; (v) misconduct by Executive that has
      or could discredit or damage the Company; (vi) Executive's indictment for
      a felony violation of the federal securities laws; or (vii) Executive's
      chronic absence from work for reasons other than illness.

            7.4 TERMINATION WITHOUT CAUSE. Notwithstanding any other provisions
      contained herein, including, but not limited to Section 4 above, the
      Company may terminate Executive's employment thirty (30) days following
      notice of termination without Cause given by the Company; provided,
      however, that during any such thirty (30) day notice period, the Company
      may suspend, with no reduction in pay or benefits, Executive from his
      duties as set forth herein (including, without limitation, Executive's
      position as a representative and agent of the Company) (termination
      pursuant to this Section 7.4 being referred to herein as termination
      "WITHOUT CAUSE").

            7.5 OTHER REMEDIES. Termination pursuant to Section 7.3 above shall
      be in addition to and without prejudice to any other right or remedy to
      which the Company may be entitled at law, in equity, or under this
      Agreement.

      8. SEVERANCE AND TERMINATION.

            8.1 VOLUNTARY TERMINATION, TERMINATION FOR CAUSE, TERMINATION FOR
      DEATH OR DISABILITY. In the case of a termination of Executive's
      employment hereunder for Death or Disability in accordance with Section
      7.1 above, or Executive's Voluntary termination of employment hereunder in
      accordance with Section 7.2 above, or a

                                       5
<PAGE>

      termination of Executive's employment hereunder for Cause in accordance
      with Section 7.3 above, (i) Executive shall not be entitled to receive
      payment of, and the Company shall have no obligation to pay, any severance
      or similar compensation attributable to such termination, other than Base
      Salary earned but unpaid, accrued but unused vacation to the extent
      required by the Company's policies, vested benefits under any employee
      benefit plan, and any unreimbursed expenses pursuant to Section 5.5 hereof
      incurred by Executive as of the Termination Date, and (ii) the Company's
      obligations under this Agreement shall immediately cease.

            8.2 TERMINATION WITHOUT CAUSE. Subject to the provisions set forth
      in this Agreement, in the case of a termination of Executive's employment
      hereunder Without Cause in accordance with Section 7.4 above, the Company
      shall pay Executive twelve (12) months' salary (hereinafter the "SEVERANCE
      PAYMENT"), payable in installments in accordance with the Company's normal
      payroll practices and subject to the tax withholding specified in Section
      5.1 above. The Company shall also provide Executive with health benefits
      equal to and under the same terms as such benefits were provided to
      Executive immediately prior to the Termination Date, or pay the same level
      of premiums for such benefits required of Executive under COBRA, 29 U.S.C.
      Section 1161, et seq. (hereinafter "BENEFIT CONTINUATION"), throughout
      any period in which Executive receives the Severance Payment under this
      Section or until Executive receives comparable benefits from any other
      source, whichever occurs first. Nothing contained herein shall interfere
      with Executive's right to purchase continuation coverage under COBRA. In
      the event of Executive's Involuntary Termination following a Change in
      Control under Section 6.1 of this Agreement, Executive shall be entitled
      to the Severance Payment and Benefit Continuation set forth in this
      paragraph, a lump-sum payment equal to two hundred ninety-nine percent
      (299%) of Executive's then-current base salary as set out in Section 5.1,
      and the accelerated vesting described in Section 6.1.

            The Company's obligation to pay and Executive's right to receive the
      Severance Payment and Benefit Continuation shall cease in the event of
      Executive's breach of his obligations under Section 9 of this Agreement,
      as reasonably determined in the sole discretion of the Company.

            8.3 SEVERANCE CONDITIONED ON RELEASE OF CLAIMS. The Company's
      obligation to provide Executive with the Severance Payment and Benefit
      Continuation set forth in Section 8.2 is contingent upon Executive's
      execution of a satisfactory release of all claims in favor of the Company.

                                       6
<PAGE>

      9. CONFIDENTIALITY, NON-SOLICITATION, AND NON-COMPETITION.

            9.1 CONFIDENTIALITY. The Executive agrees that he shall not,
      directly or indirectly, use, make available, sell, disclose or otherwise
      communicate to any person, other than in the course of the Executive's
      assigned duties and for the benefit of the Company, either during the
      period of the Executive's employment or at any time thereafter, any
      nonpublic, proprietary or confidential information, knowledge or data
      relating to the Company or any of its subsidiaries, affiliated companies
      or businesses. The foregoing shall not apply to information that (i) was
      known to the public prior to its disclosure to the Executive; (ii) becomes
      known to the public subsequent to disclosure to the Executive through no
      wrongful act of the Executive or any representative of the Executive; or
      (iii) the Executive is required to disclose by applicable law, regulation
      or legal process (provided that the Executive provides the Company with
      prior notice of the contemplated disclosure and reasonably cooperates with
      the Company at its expense in seeking a protective order or other
      appropriate protection of such information). Notwithstanding clauses (i)
      and (ii) of the preceding sentence, the Executive's obligation to maintain
      such disclosed information in confidence shall not terminate where only
      portions of the information are in the public domain. Furthermore,
      Executive shall deliver promptly to the Company upon termination of his
      employment, or at any time the Company may so request, all memoranda,
      notes, records, reports, manuals, software, models, designs, and other
      documents and computer records (and all copies thereof) relating to the
      business of the Company or any of its affiliates or subsidiaries, and all
      property associated therewith, which he may then possess or have under his
      control. This Agreement supplements and does not supersede Executive's
      obligations under statute or the common law to protect the Company's or
      any of its affiliates' or subsidiaries' trade secrets and confidential
      information.

            9.2 NONSOLICITATION. During the Executive's employment with the
      Company and for the two (2) year period thereafter, the Executive agrees
      that he will not, directly or indirectly, individually or on behalf of any
      other person, firm, corporation or other entity, knowingly solicit, aid or
      induce (i) any managerial level employee of the Company or any of its
      subsidiaries or affiliates to leave such employment to accept employment
      with or render services to or with any other person, firm, corporation or
      other entity unaffiliated with the Company or knowingly take any action to
      materially assist or aid any other person, firm, corporation or other
      entity in identifying or hiring any such employee or (ii) any customer of
      the Company or any of its subsidiaries or affiliates to purchase goods or
      services then sold by the Company or any of its subsidiaries or affiliates
      from another person, firm, corporation or other entity or assist or aid
      any other persons or entity in identifying or soliciting any such
      customer.

            9.3 NONCOMPETITION. The Executive acknowledges that he performs
      services of a unique nature for the Company that are irreplaceable, and
      that his performance of such services to a competing business will result
      in irreparable harm to the Company. Accordingly, during the Executive's
      employment hereunder and for the two (2) year period thereafter
      (regardless of the reason for the separation), the Executive agrees that
      the Executive will not:

                                       7
<PAGE>

                        (i) directly or indirectly, own, manage, operate,
            control, be employed by (whether as an employee, consultant,
            independent contractor or otherwise, and whether or not for
            compensation) or render services to any person, firm, corporation or
            other entity, in whatever form, engaged in any business of the same
            type as any business in which the Company or any of its subsidiaries
            or affiliates is engaged on the date of termination or in which they
            have proposed, on or prior to such date, to be engaged in on or
            after such date and in which the Executive has been involved to any
            extent at any time during the 12-month period ending with the date
            of termination, within the geographical area in which Executive has
            been performing services on behalf of the Company or for which he
            has been assigned responsibility at anytime within the twelve (12)
            months preceding his separation. This Section 9.3(i) shall not
            prevent the Executive from owning not more than one percent of the
            total shares of all classes of stock outstanding of any publicly
            held entity engaged in such business, nor will it restrict the
            Executive from rendering services to charitable organizations, as
            such term is defined in Section 501(c) of the Internal Revenue Code.

                        (ii) within the geographical area in which Executive has
            been performing services on behalf of the Company or for which he
            has been assigned responsibility at anytime within the twelve (12)
            months preceding his separation, directly or indirectly in any
            competitive capacity, work for, advise, manage, or act as an agent
            or consultant for or have any business connection or business or
            employment relationship with any entity or person engaged in
            research, development, production, sale or distribution of a product
            or service that competes with or is substantially similar to any
            product or service in research, development or design, or produced,
            sold or distributed by the Company or any of its subsidiaries or
            affiliates.

                        (iii) directly or indirectly market, sell or otherwise
            provide any products or services that are competitive with or
            substantially similar to any product or service in research,
            development or design, or produced, sold or distributed by the
            Company, or any of its subsidiaries or affiliates, to any customer
            of the Company with whom Executive has had contact (either directly
            or indirectly) or over which he has had responsibility at any time
            during the twelve (12) months preceding his separation.

            9.4 EQUITABLE RELIEF, OTHER REMEDIES, AND JURISDICTION. The
      Executive acknowledges and agrees that the Company's remedies at law for a
      breach or threatened breach of any of the provisions of this Section would
      be inadequate and, in recognition of this fact, the Executive agrees that,
      in the event of such a breach or threatened breach, in addition to any
      remedies at law, the Company, without posting any bond, shall be entitled
      to obtain equitable relief in the form of specific performance, temporary
      restraining order, a temporary or permanent injunction or any other
      equitable remedy which may then be available. With respect to any suit,
      action, or other proceeding for equitable relief under Section 9 of this
      Agreement, the Company and Executive hereby irrevocably agree to the
      exclusive personal jurisdiction and venue of the United States District
      Court for the

                                       8
<PAGE>

      Southern District of Indiana (and any Indiana State Court within Marion
      County, Indiana).

            9.5 REFORMATION. If it is determined by a court of competent
      jurisdiction (or the arbitrators pursuant to Section 13.6) that any
      restriction in this Section 9 is excessive in duration or scope or is
      unreasonable or unenforceable under the laws of that state, it is the
      intention of the parties that such restriction may be modified or amended
      by the court to render it enforceable to the maximum extent permitted by
      the law of that state.

            9.6 SURVIVAL OF PROVISIONS. The obligations contained in this
      Section 9 shall survive the termination or expiration of the Executive's
      employment with the Company and shall be fully enforceable thereafter.

      10. REPRESENTATIONS AND WARRANTIES BY EXECUTIVE. Executive represents and
warrants to the Company that (i) this Agreement is valid and binding upon and
enforceable against him in accordance with its terms, (ii) Executive is not
bound by or subject to any contractual or other obligation that would be
violated by his execution or performance of this Agreement, including, but not
limited to, any non-competition agreement presently in effect, and (iii)
Executive is not subject to any pending or, to Executive's knowledge, threatened
claim, action, judgment, order, or investigation that could adversely affect his
ability to perform his obligations under this Agreement or the business
reputation of the Company. Executive has not entered into, and agrees that he
will not enter into, any agreement either written or oral in conflict herewith.

      11. CHANGE IN CONTROL BENEFIT LIMIT.

            11.1 BENEFIT LIMIT. The aggregate Present Value (measured as of the
      Change in Control) of the benefits to which Executive becomes entitled
      under this Agreement either at the time of the Change in Control or at the
      time of his subsequent termination of employment (namely, the Severance
      Payment and Benefit Continuation in Section 8.2 and Option Parachute
      Payment attributable to his accelerated options) will in all events be
      limited to the amount (the "BENEFIT LIMIT") that yields Executive the
      greatest after-tax amount payable to him under this Agreement after taking
      into account the excise tax (if any) imposed under Code Section 4999 ) on
      the payments and benefits that are provided Executive under this Agreement
      or that constitute Other Parachute Payments.

            11.2 DEFINITIONS For purposes of applying Code Sections 280(G) and
      4999 and the Treasury Regulations thereunder to determine the Benefit
      Limit in effect under this Section 11.2, the following definitions shall
      be in effect:

            CODE means the Internal Revenue Code of 1986, as amended from time
            to time.

            OPTION PARACHUTE PAYMENT means, with respect to any of Executive's
            options accelerated pursuant to this Agreement, the portion of that
            option deemed to be a parachute payment under Code Section 280G and
            the Treasury Regulations issued thereunder. The portion of such
            Option which is categorized as an

                                       9
<PAGE>

            Option Parachute Payment will be calculated in accordance with the
            valuation provisions established under Code Section 280G and the
            applicable Treasury Regulations and will include an appropriate
            dollar adjustment to reflect the lapse of Executive's obligation to
            remain in the Company's employ as a condition to the vesting of the
            accelerated installment. In no event, however, will the Option
            Parachute Payment attributable to any accelerated option (or
            accelerated installment) exceed the spread (the excess of the fair
            market value of the accelerated option shares over the option
            exercise price payable for those shares) existing at the time of
            acceleration.

            OTHER PARACHUTE PAYMENT means any payment in the nature of
            compensation (other than the benefits to which Executive becomes
            entitled under this Agreement) which are made to him in connection
            with the Change in Control and which accordingly qualify as
            parachute payments within the meaning of Code Section 280G(b)(2) and
            the Treasury Regulations issued thereunder.

            PARACHUTE PAYMENT means any payment or benefit provided Executive
            under this Agreement (other than the Option Parachute Payment) which
            is deemed to constitute a parachute payment within the meaning of
            Code Section 280G(b)(2) and the Treasury Regulations issued
            thereunder.

            PRESENT VALUE means the value, determined as of the date of the
            Change in Control, of any payment in the nature of compensation to
            which Executive becomes entitled in connection with the Change in
            Control or the subsequent termination of his employment, including
            (without limitation) the Option Parachute Payment attributable to
            the accelerated vesting of his options and any additional benefits
            to which Executive becomes entitled under this Agreement. The
            Present Value of each such payment shall be determined in accordance
            with the provisions of Code Section 280G(d)(4), utilizing a discount
            rate equal to one hundred twenty percent (120%) of the applicable
            Federal rate in effect at the time of such determination, compounded
            semi-annually to the effective date of the Change in Control.

            11.3 RESOLUTION PROCEDURE. In the event there is any disagreement
      between Executive and the Company as to whether one or more payments to
      which Executive becomes entitled in connection with either the Change in
      Control or his subsequent termination of employment constitute Parachute
      Payments, Option Parachute Payments or Other Parachute Payments or as to
      the determination of the Present Value thereof, such dispute will be
      resolved as follows:

                                       10
<PAGE>

                        (i) In the event temporary, proposed or final Treasury
            Regulations in effect at the time under Code Section 280G (or
            applicable judicial decisions) specifically address the status of
            any such payment or the method of valuation therefor, the
            characterization afforded to such payment by the Regulations (or
            such decisions) will, together with the applicable valuation
            methodology, be controlling.

                        (ii) In the event Treasury Regulations (or applicable
            judicial decisions) do not address the status of any payment in
            dispute, the matter will be submitted for resolution to the
            Company's independent auditors ("INDEPENDENT AUDITORS"). The
            resolution reached by the Independent Auditors will be final and
            controlling. All expenses incurred in connection with the retention
            of the Independent Auditors to resolve the dispute shall be shared
            equally by Executive and the Company.

                        (iii) In the event Treasury Regulations (or applicable
            judicial decisions) do not address the appropriate valuation
            methodology for any payment in dispute, the Present Value thereof
            will, at the Independent Auditor's election, be determined through
            an independent third-party appraisal, and the expenses incurred in
            obtaining such appraisal shall be shared equally by Executive and
            the Company.

            11.4 STATUS OF BENEFITS.

                        (i) No Severance Payment or Benefit Continuation will be
            made to Executive under this Agreement and none of his options shall
            vest and become exercisable on an accelerated basis hereunder, until
            the Present Value of the Option Parachute Payment attributable to
            the accelerated vesting of such options has been determined and the
            status of any payments in dispute under Section 11.3 has been
            resolved in accordance therewith. The post-termination exercise
            period for any options which cannot be exercised by reason of the
            foregoing limitation shall automatically be stayed and shall not be
            deemed to run during any period the option remains so unexercisable.

                        (ii) Once the requisite determinations under Section
            11.3 have been made, then to the extent the aggregate Present Value,
            measured as of the Change in Control, of (1) the Option Parachute
            Payment attributable to the accelerated options (or installments
            thereof) plus (2) the Parachute Payment attributable to the
            Executive's Severance Payment and Benefit Continuation under this
            Agreement would, when added to the Present Value of all of the
            Executive's Other Parachute Payments, exceed the Benefit Limit, the
            Executive's Severance Payment will first be reduced, then the
            Benefit Continuation shall be reduced, and lastly then the number of
            option shares subject to accelerated vesting shall be reduced (based
            on their Option Parachute Value) to the extent necessary to assure
            the Benefit Limit is not exceeded.

                                       11
<PAGE>

      12. GUARANTEE OF STANDARD MANAGEMENT CORPORATION. The Guarantor
unconditionally guarantees the financial obligations of the Company payable to
Executive as provided in Sections 5, 6 and 8 in this Agreement.

      13. MISCELLANEOUS.

            13.1 NOTICES. All notices, requests, and other communications
      hereunder must be in writing and will be deemed to have been duly given
      only if delivered personally against written receipt or by facsimile
      transmission with answer back confirmation or mailed (postage prepaid by
      certified or registered mail, return receipt requested) or by overnight
      courier to the parties at the following addresses or facsimile numbers:

            If to the Executive, to:

                     Martial R. Knieser, M.D.
                     9654 Halsey Drive
                     Indianapolis, Indiana 46256

            If to the Company, to:

                     U.S. Health Services Corporation
                     10689 N. Pennsylvania
                     Indianapolis, Indiana  46280
                     Attn: Ronald D. Hunter, Chairman

            If to the Guarantor, to:

                     Standard Management Corporation
                     10689 N. Pennsylvania
                     Indianapolis, Indiana  46280
                     Attn: Ronald D. Hunter, Chairman

      All such notices, requests and other communications will (i) if delivered
      personally to the address as provided in this Section 13.1, be deemed
      given upon delivery, (ii) if delivered by facsimile transmission to the
      facsimile number as provided in this Section 13.1, be deemed given upon
      receipt, and (iii) if delivered by mail in the manner described above to
      the address as provided in this Section 13.1, be deemed given upon receipt
      (in each case regardless of whether such notice, request, or other
      communication is received by any other person to whom a copy of such
      notice, request or other communication is to be delivered pursuant to this
      Section). Any party from time to time may change its address, facsimile
      number, or other information for the purpose of notices to that party by
      giving written notice specifying such change to the other parties hereto.

                                       12
<PAGE>

            13.2 AUTHORIZATION TO BE EMPLOYED. This Agreement, and Executive's
      employment hereunder, is subject to Executive providing the Company with
      legally required proof of Executive's authorization to be employed in the
      United States of America.

            13.3 ENTIRE AGREEMENT. This Agreement supersedes all prior
      discussions and agreements among the parties with respect to the subject
      matter hereof and contains the sole and entire agreement between the
      parties hereto with respect thereto.

            13.4 WAIVER. Any term or condition of this Agreement may be waived
      at any time by the party that is entitled to the benefit thereof, but no
      such waiver shall be effective unless set forth in a written instrument
      duly executed by or on behalf of the party waiving such term or condition.
      No waiver by any party hereto of any term or condition of this Agreement,
      in any one or more instances, shall be deemed to be or construed as a
      waiver of the same or any other term or condition of this Agreement on any
      future occasion. All remedies, either under this Agreement or by law or
      otherwise afforded, will be cumulative and not alternative.

            13.5 AMENDMENT. This Agreement may be amended, supplemented, or
      modified only by a written instrument duly executed by or on behalf of
      each party hereto.

            13.6 ARBITRATION OF DISPUTES; INJUNCTIVE RELIEF. Any controversy or
      claim arising out of or relating to this Agreement or the breach thereof,
      other than injunctive relief under Section 9.4, shall be settled by
      binding arbitration in the City of Indianapolis, Indiana, in accordance
      with the laws of the State of Indiana, by three arbitrators, one of whom
      shall be appointed by the Company, one by Executive and the third of whom
      shall be appointed by the first two arbitrators. If the first two
      arbitrators cannot agree on the appointment of a third arbitrator, then
      the third arbitrator shall be appointed by the Chief Judge of the United
      States District Court for the Southern District of Indiana. The
      arbitration shall be conducted in accordance with the rules of the
      American Arbitration Association, except with respect to the selection of
      arbitrators, which shall be as provided in this Section. Judgment upon the
      award rendered by the arbitrators may be entered in any court having
      jurisdiction thereof.

            13.7 RECOVERY OF ATTORNEY'S FEES. In the event of any litigation or
      arbitration arising from or relating to this Agreement, the prevailing
      party in such litigation or arbitration proceedings shall be entitled to
      recover, from the non-prevailing party, the prevailing party's reasonable
      costs and attorney's fees, in addition to all other legal or equitable
      remedies to which it may otherwise be entitled.

            13.8 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
      Agreement are intended solely for the benefit of each party hereto and the
      Company's successors or assigns, and it is not the intention of the
      parties to confer third-party beneficiary rights upon any other person.

                                       13
<PAGE>

            13.9 NO ASSIGNMENT; BINDING EFFECT. This Agreement shall inure to
      the benefit of any successors or assigns of the Company. Executive shall
      not be entitled to assign his obligations under this Agreement.

            13.10 HEADINGS. The headings used in this Agreement have been
      inserted for convenience of reference only and do not define or limit the
      provisions hereof.

            13.11 SEVERABILITY. The Company and Executive intend all provisions
      of this Agreement to be enforced to the fullest extent permitted by law.
      Accordingly, if a court of competent jurisdiction determines that the
      scope and/or operation of any provision of this Agreement is too broad to
      be enforced as written, the Company and Executive intend that the court
      should reform such provision to such narrower scope and/or operation as it
      determines to be enforceable. If, however, any provision of this Agreement
      is held to be illegal, invalid, or unenforceable under present or future
      law, and not subject to reformation, then (i) such provision shall be
      fully severable, (ii) this Agreement shall be construed and enforced as if
      such provision was never a part of this Agreement, and (iii) the remaining
      provisions of this Agreement shall remain in full force and effect and
      shall not be affected by illegal, invalid, or unenforceable provisions or
      by their severance.

            13.12 GOVERNING LAW. This Agreement shall be governed by and
      construed in accordance with the laws of the State of Indiana applicable
      to contracts executed and performed in such state without giving effect to
      conflicts of laws principles.

            13.13 COUNTERPARTS. This Agreement may be executed in any number of
      counterparts and by facsimile, each of which will be deemed an original,
      but all of which together will constitute one and the same instrument.

                [SIGNATURE PAGE TO EMPLOYMENT AGREEMENT FOLLOWS]

                                       14
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first written above.

                             "EXECUTIVE"

                             MARTIAL R. KNIESER, M.D.

                             /s/ Martial R. Knieser M.D.
                             ---------------------------------------------------
                             Executive's Signature

                             ---------------------------------------------------
                             Address

                             ---------------------------------------------------
                             Address

                             "COMPANY"

                             U.S. HEALTH SERVICES CORPORATION

                             By: /s/ Ronald D. Hunter
                                 -----------------------------------------------

                             Name: Ronald D. Hunter

                             Title: Chairman and CEO

                             "GUARANTOR"

                             STANDARD MANAGEMENT CORPORATION

                             By: /s/ Ronald D. Hunter
                                 -----------------------------------------------

                             Name: Ronald D. Hunter

                             Title: Chairman and CEO


                    [SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

                                       15